Cash is flowing, is it going in the right direction?
Date: July 21, 2015
Name: Cash is flowing, is it going in the right direction?
Presenter: Melanie Buffel
Many entrepreneurs try to budget but still spend more than they intend. Moreover, entrepreneurs allow this to happen because of a lack of system in place. The “Rich from the Inside Out” series invites Melanie Buffel, the Money Coach, to help entrepreneurs to develop a simple system to manage money to achieve their ultimate goals. Entrepreneurs will learn the practical methodology or solution to prioritize their financial cash flow. Moreover, it will create new awareness to increase entrepreneurs’ confidence towards their future destination.
Melanie Buffel is the Certified Money Coach from Money Coaches Canada and faculty of the Women’s Financial Learning Centre. With the psychology education background, she manages to inspire and encourage many entrepreneurs to take control over their financial situation. In addition, her passion of designing simple system to help entrepreneurs establish their financial and life balance. She helps many entrepreneurs to stay on track with their financial goals.
The purpose behind Money Coach
Melanie Buffel believes her career purpose is to help people build financial foundation. Buffel will help entrepreneurs to fill the gap in the market place. Money Coach refers a term called “Bankish”, which means the language from bankers. The message behind “Bankish” is to pass power to other bank for financial advice. Money Coach will help entrepreneurs to reduce the risk and understand the financial language. Buffel will also help entrepreneurs to discover the reason “why” behind their intention.
Many entrepreneurs get confused when money comes into their lives. Buffel will help entrepreneurs to clear the money fog and work towards develop peace of mind for entrepreneurs.
Buffel wants entrepreneurs to have the habit of planning for future. Entrepreneurs need to discover what is important to them. Entrepreneurs should have short term and long term goals that leads to the ultimate lifestyle. Moreover, entrepreneurs need to share their goals and allow others to celebrate and support them.
Buffel explains that money comes from two streams: saving and cash flow. Entrepreneurs need to discover what it takes to achieve their goals and their time frame. By using reverse engineering concept, Buffel believes entrepreneurs will discover their path of achievements.
Buffel emphasizes the word “budget” can be a bad word for many entrepreneurs. Budget connects to scarcity, which gives an end feeling towards their goals. Spending and saving plan can be abundance. Successful entrepreneurs will have mindful spending habits, living within their means. If there is a way to pay down debt faster for entrepreneurs, they can save their ways to their goals.
“Taking control of you money”
Many entrepreneurs use the traditional method of saving. The traditional method is to deposit all income into cheque accounts and transfer the funds to the debt. Afterwards, the remaining will consider to be their saving amount.
Buffel believes entrepreneurs should setup an automatic system. Buffel wants entrepreneurs to remember the number one rule to help them receive balance financial lifestyle.
Number one rule: Income = Spending + Saving
The sum of spending and saving should be equal to the income. Income can come from employment, child benefit, rental income or investments. Spending comes from the monthly fixed and variable expenses. This also includes any debt repayment. Saving is for fixed annual bills and irregular variable expenses. However, this is also the section to include goals and dreams.
People get used to be in debt. In long term, people will pay more interests. Buffel believes it is possible to save even if entrepreneurs have debts as long as there is a system. Buffel wants entrepreneurs to put debt elimination as their number one priority. The key is systemic payment plan and this key will ensure entrepreneurs to get off the “never ever” plan.
Entrepreneurs should set a deb free date. Buffel mentions entrepreneurs should always look for ways to reduce the interests. Entrepreneurs should also determine their monthly payment amount. Entrepreneurs can automate that amount monthly.
Plan for the goals
Buffel illustrates a simple calculation to determine the monthly amount requires to achieve goals.
Cost of the goal / the number of months to reach the goal
Entrepreneurs should prioritize the goals and make them as fixed costs. Entrepreneurs should always pay themselves first. Moreover, they will be able to bridge the budget to their lifestyle.
Cash flow management for success
Buffel revels the simple system for entrepreneurs. Entrepreneurs need to create 4 major categories: monthly spending, fixed monthly expenses, annual lump spending, and long term savings goals.
The monthly spending category should includes the daily necessities, such as groceries, cleaning supplies, traveling, entertainment, and dine out. The fixed monthly expenses include rent, insurance, property upkeep, utilities, lease and other insurance payments. The annual lump spending should include irregular annual fees, such as property taxes and insurance, subscription, membership, maintenance and other annual fees. Lastly, the long term saving goals should include be retirement, investment, eduction and other emergency fund.
All the dream goals should be under the category of annual lump spending. Clarity is important and entrepreneurs need to allow the system to automate the transfer to each different categories. The system should adjust based on the income flow.
Buffel suggests entrepreneurs to breakdown all the categories. This will help entrepreneurs to keep track of their financial situation. Moreover, it gives them the permission to spend and save. Resistance is fertile; therefore, entrepreneurs need to change their confidence in their spending habits. Entrepreneurs should allow themselves to take control and force to take action.
The system will create attention for entrepreneurs to aware their finance life.